What French Investors Are Seeing In Kenya

French multinationals’ growing interest in Kenya was displayed last week when a high-powered delegation of 50 business executives arrived in Nairobi to scout for deals.

President meets top executives of 50 French firms searching for investment opportunities in Kenya | Photo: French Embassy in Kenya Facebook Page

The French embassy, through its investments promotion unit, Business France, organised the three-day visit to Kenya by some of the country’s top executives, including the bosses of telecom equipment maker, Alcatel-Lucent and Airbus, an aircraft manufacturer.

French Minister of State for Foreign Trade, Matthias Fekl, led the delegation to State House where he met President Uhuru Kenyatta, signalling renewed business ties.

Records indicate that French firms in Kenya have more than doubled to 70 since 2012— underlining a widening interest in East Africa’s economic powerhouse.

But bilateral trade remains heavily skewed in favour of France. Official data shows that Kenya’s exports to France grew 12 per cent to Sh5.6 billion between 2010 and 2014, while imports rose 20.4 per cent to Sh22.4 billion in the same period.

This makes France the third largest source market for Kenya’s imports in Western Europe, after the UK and Germany, and the sixth largest market for Kenya’s exports in the bloc.

The Business Daily talked to Mr Fekl’s on his country’s rising interest in Kenya and other diplomatic issues. Here are the excerpts.

Bilateral trade between these two countries highly favours France. What measures should both governments take to reduce the gap?

The Economic Partnership Agreement (EPA) between the East African Community (EAC) and the European Union offers the best opportunity to achieve more balanced trade.

A new free trade agreement is on course to being ratified by the EU, meaning Kenya, like other East African nations, will continue having uninterrupted preferential access to the EU market comprising 28-member states and 350 million consumers —no customs duty, no quotas.

The country should capitalise on this market by growing its export volumes.

(The previous interim preferential trade deal lapsed in October without the EAC reaching a deal with the EU. This resulted in a brief introduction of taxes on Kenya’s horticultural produce, before a stop-gap deal was reached that waived the charges, pending ratification of a substantive deal).

Given the trade imbalance, the agreements will also allow Kenya to protect some of its infant sectors that are most vulnerable to external competition and allow them time to develop.

What do you think of Kenya’s investment climate?

I understand there have been significant reforms in multiple sectors geared towards easing the cost of doing business. This is quite welcome.

Besides, there is need to cut bureaucracy, providing appropriate legal framework, combating market distortions and tackling corruption. Most importantly, the business community should be assured of security. Basically, capital inflows are guided by these factors.

What measures have been lined up to promote trade between Kenya and France?

Business France opened its office in Nairobi in 2013 to assist French firms interested in investing in Kenya and neighbouring East African nations.

We reckoned that being present locally would help better understand the country’s socio-economic fabric, business climate and establish potential partners for French firms.

At the moment, Business France mainly promotes exports to Africa. But we look to set up a one-stop-shop that will support African entrepreneurs who plan to invest in France.

The Nairobi office has enabled several French firms to penetrate the Kenyan market. The recent visit by the French delegation, which is the first of its kind in the region, fits perfectly within our mission.

What products should Kenya leverage on to grow its exports to France?

Kenyan agricultural and horticultural products, which are among the best in the world, have a major competitive advantage in France.

French multinationals have expanded their footprint in Kenya with the latest entrant being smartphone maker Wiko. What is driving this investment interest?

This is certainly a vote of confidence in the Kenyan market.

What should Kenyan firms consider before investing in France?

We have a vibrant agricultural sector, agri-food industries, research and development and technology all of which present huge investment opportunities. Moreover, France now has the best tax credit system.

It is also possible for Kenyan businesses to be listed on the Euronext Paris as has French oil major Total on the Nairobi Securities Exchange.

What is your take on Kenya’s technology space?

I am impressed by the wide adoption of technology in various sectors of the economy (banking, telecommunication, insurance, retail) and the role of innovation in the country’s growth. Let me single out mobile banking.

This concept is still nascent in France, but I am amazed that over 18 million Kenyans have bank accounts on their phones! I am equally impressed by the wide use of social networks among Kenyans as a dependable communication tool.

How better can Kenya’s private sector play an active role in powering the country’s growth?

The private sector is the engine for driving growth and spinning off jobs. The sector, though its representatives, should forge close ties with the government through dialogue. That way, they can directly present their views on what they think should be improved on.